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There are significant benefits to forming an LLC such as limited liability, fewer
corporate formalities, pass-through tax treatment, and flexible allocation of profits
and losses. Using CorpNet® to form your LLC can save you both time and
money with service that is fast, reliable and affordable…. And remember,
our services are backed by a 100% satisfaction guarantee. We make everything
easy for you so that you can focus on what you do best – running your business!

LLC Benefits

There are significant benefits to forming an LLC and CorpNet® can help you realize
those benefits while saving you both time and money with service that is fast, reliable
and affordable.

Limited Liability

Like a corporation, owners of an LLC enjoy limited liability, which protects their
personal assets from judgments and other obligations of the entity. If the
LLC incurs debts or liabilities, the creditors are limited to the assets of the
LLC. In the event the assets are insufficient to cover the debts of the business,
creditors may not generally collect additional amounts from the members.
By contrast, a sole proprietor is personally liable for all the obligations of the
business. This means that sole proprietors risks everything they own to satisfy
the debts or judgments of their respective businesses, including their homes, cars
and personal savings and investments.

Fewer Formalities Required

A Limited Liability Company also typically requires fewer corporate formalities,
such as regular meetings of a board of directors and an annual meeting of shareholders,
than either an S or C-Corporation. They do, however, require proper filing
of Articles of Organization with the Secretary of State to be formed and the members
of the LLC are required to enter into an Operating Agreement that governs how the
LLC will be operated.

Pass-Through Tax Treatment

LLCs are treated as “pass through” entities under the Internal Revenue
Code unless the members elect to have it taxed like a corporation. This means
that the owners report profits and losses only on their own personal income tax
forms and no separate entity level filing is required. If a C-Corporation
earns a profit, that profit is taxed. If those profits are then distributed
to its shareholders, the shareholders pay income taxes on those dividends.
This is known as the “double tax” and, while there are ways for small
businesses to legitimately avoid the double tax, LLCs that have pass-through tax
treatment are not subject to it at all.

Flexible Allocation of Profits and Losses

Members of an LLC may generally agree to allocate profits and losses among themselves
in any way they wish; they are not required to allocate them in proportion to ownership
interest. This allows for more flexibility in separating ownership interest
from distribution of profits from ongoing operations, which may be useful, for example,
in businesses where some owners are actively involved in day-to-day activities while
others are not. It also provides significant flexibility in tax planning for
its members. Always check with your tax accountant or advisor when setting
or changing allocations.